Loyalty, Profit Drive Knight Rescue

TD Ameritrade's Participation Indicates Firm Remains Viable, but Further Steps May Be Needed

Knight Capital reached an agreement with investors for a $400 million lifeline after a glitch cost the trading firm $440 million last week. But what are the lessons for investors? Elizabeth O'Brien joins Markets Hub to discuss. Photo: AP.

By

Jacob Bunge,

Anupreeta Das and

Telis Demos

Updated Aug. 7, 2012 10:23 p.m. ET

Wall Street came to the aid of one of its own Monday, with a group of financial firms injecting $400 million to keep Knight Capital Group Inc. afloat in a deal that produced crucial backing but punished shareholders.

The price was high for Knight, which needed help to cover a $440 million loss tied to a software error last week that let loose a slew of errant trades. The group of six investors, including investment bank Jefferies Group Inc., buyout firm Blackstone Group LP and Knight rival Getco LLC, took effective...